Late last month, Uzbek President Shavkat Mirziyoyev delivered his annual state-of-the-nation speech. Among other significant highlights, Mirziyoyev promised propiska reform.
“We have shackled our citizens and failed to solve this problem for 30 years,” he said of the country’s existing registration system. The infamous system dates to the Soviet era and, according to a recent paper published by the World Bank, is holding Uzbekistan’s economic development back.
William Seitz, an economist at the World Bank and the paper’s author, spoke to The Diplomat about the propiska system, the benefits of easier internal migration and what the Uzbek government is doing to change the system.
Uzbekistan has one of the lowest rates of internal migration in the world — what the effects of this on Uzbeks and the Uzbek economy?
The very low rates of internal migration in Uzbekistan lead to imbalances in the labor market and very likely reduce the pace of economic growth. There are some parts of the country with many more workers than there are jobs, leading to unemployment and relatively low average wages. At the same time, other parts of the country – particularly urban areas – have much lower rates of unemployment and substantially higher average wages. This is a common pattern in countries that are becoming richer and undergoing the process of structural transformation.
The challenge in Uzbekistan is that it is quite difficult for people to move within the country, much more so than in other parts of the world. With more migration, there would be a better match between where people live and where jobs are being created. Decades of international experience suggest that supporting mobility reduces these imbalances, leading to faster rates of economic growth and boosting the pace that lower-income areas catch-up to living standards in higher-income ones.
In a recent paper for the World Bank, you looked at two barriers impeding Uzbekistan’s ability to hit its desired urbanization and growth targets: legal limits on internal migration and the high cost of housing in the most dynamic urban centers. Can you explain the legal limits, the propiska system, for our readers who may not be familiar?
In Uzbekistan and a few other countries that were formerly part of the Soviet Union, people are required to register with the local authorities where they live, and to carry something akin to a passport as they travel within the country. There are some restrictions and privileges associated with where a person is registered.
For instance, until recently in Uzbekistan a person could not apply for a job in a place other than where they were registered. It is still particularly difficult to obtain permanent registration in Tashkent, the capital city, and only a small number of people may apply (usually on the basis of family relationships).
Today, a significant number of people hold only temporary registration where they live, and they are limited in what they can do outside of their place of permanent registration. For instance, the right to purchase existing housing in Tashkent is restricted to people who have permanent registration there.
Why does this system persist in Uzbekistan?
Changing the system requires adjusting to a different way of doing things. Propiska has long been used to direct economic development and social resources. Relaxing restrictions implies that economic activities will expand more organically instead, and in locations chosen on the basis of individual preferences.
Some people are concerned that reform may lead to very rapid migration in the country. Meeting rising demand for public services in high-demand areas could be challenging in such a scenario. However, mitigating this concern is the fact that providing public services and infrastructure tends to be much more cost effective in urban areas, where the current restrictions are strongest and where most potential migrants would like to move.
Getting rid of the registration system entirely would also be challenging with respect to administering many government social and economic programs, as it also collects very detailed information about Uzbek citizens. To address this issue, some countries that liberalized similar registration systems opted to maintain their data collection function, while eliminating restrictions and privileges that are linked to a person’s registration.
Another motivation often cited for maintaining the system relates to security and public safety. However, experience from countries that lack such systems suggests that there are more efficient and less costly ways to achieve these objectives.
How have these conditions — limits on internal migration and high housing costs — affected the urbanization process in Uzbekistan?
These challenges contribute to the ongoing slow rate of population growth in urban areas. Strong labor markets and productivity growth usually pull in workers from less productive parts of an economy. But this is not happening very quickly in Uzbekistan. This is especially true for the city of Tashkent, which is both the most productive part of the country and by far the slowest growing in terms of population.
Between 1989 and 2019, Tashkent’s population only grew by 17 percent compared to a national increase of more than 36 percent. This dynamic has led to income growth accumulating most rapidly for an increasingly smaller slice of the population. Residents of Tashkent enjoyed the fastest rate of income growth last year – 12.2 percent in inflation-adjusted terms – more than twice the national average of 5.2 percent. This is even more remarkable when one considers that incomes were already highest there.
The survey work underlying your analysis found that a majority favor removing propiska limits — has the Uzbek government pursued any reforms in this area?
Yes, the survey you refer to is part of an ongoing study called Listening to the Citizens of Uzbekistan (L2CU) jointly conducted by the Development Strategy Center in Tashkent and the World Bank. It involves over 4,000 households across Uzbekistan. It finds that reforming propiska is highly popular. More than 90 percent of respondents consistently say that they support removing residency restrictions and limits to domestic migration. Reforms are supported by large majorities even among those already living in cities.
This has been a particular area of focus for President Mirziyoyev since he came into office in 2016, and there are very important changes happening as we speak. In his address to Oliy Majlis (the National Parliament) on January 24, the president instructed the government to prepare a comprehensive reform of propiska by the first of April. He emphasized that the system is unfair, and that people should be allowed to live and work where they wish.
The First Vice-Speaker of the Legislative Chamber of Oliy Majlis and the Head of the National Human Rights Center Akmal Saidov called propiska a form of discrimination a few days after the president’s address. Many other high-level officials have subsequently commented on how important reform is for the future of the country.
At the same time, the president announced another reform that will be transformational for those affected – that stateless people who began living in Uzbekistan before 1995 (and who have remained long-term residents) will be granted citizenship in 2020. This will be a very important change because there are many people in this situation living in Uzbekistan, and they had long-standing challenges in navigating the propiska system.
These announcements follow a series of important administrative changes over the past two years. Notable among them was an effort to streamline the issuance of temporary registration and to relax restrictions on applications for employment outside of a person’s region of permanent residence. It is now also permitted for people to purchase newly constructed housing in the city of Tashkent, though restrictions on existing housing remain in place.
A majority, per the survey, also favored increasing the pace of urban housing construction. But the demolition of older neighborhoods in places like Tashkent has generated some local opposition. Did you find a relationship between these two matters which would seem to be at odds?
The results of the L2CU survey show that most people are very happy to see faster growth in urban areas, and more urban housing construction. But we also find that people are sensitive to the fairness in how this is accomplished. Addressing this has been another area of focus by the government of Uzbekistan over the past year.